Polybutylene/starch/nanoclay composite blends were prepared by melt extrusion technique. Maleic anhydride grafted polybutylene was used as a compatibilizer. The nanocomposites were characterized by X-ray diffraction, scanning electron microscopy, transmission electron microscopy, atomic force microscopy, rheological, and mechanical analysis. Addition of compatibilizer to the polybutylene/starch/nanoclay showed dispersion and nucleation related to the nanoclay in the polybutylene matrix. An increase in the mechanical properties like modulus and tensile strength at break and a decrease in the elongation at break were observed on the addition of compatibilizer to the matrix compared to that of uncompatibilized matrix. The biodegradability of the nanocomposites was studied using the landfill burial test. The blends subjected to the burial test were evaluated for their tensile properties. The results revealed that the tensile strength and elongation at break of the compatibilized nanocomposites decreased after 80 days of land burial test compared to the initial period.